37.2.1.5 Prepayments

Oracle Asset Liability Management provides five prepayment calculation methods: Constant, Prepayment Model, PSA, Arctangent, and ADCo (Andrew Davidson and Co.) Prepayment.

For more information, see the Prepayment Rules section.

Defining the ADCo Prepayment Method:

To define prepayment assumptions using the ADCo Prepayment method, follow these steps:

Prerequisites:

Performing basic steps for creating or updating a Prepayment rule.

To define the ADCo Prepayment Method, follow these steps:

1. Select the currency as US Dollar and Product Account Type as an Earning Asset.
2. Select ADCO Prepayment method from the Prepayment Method drop-down list. The Prepayment UI shows the ADCO Prepayment method as an available method in the drop-down list, only if the ALM_ADCO function is mapped.
3. Select Refinance or Curtailment from the Calculation drop-down list.
4. The ADCO Prepayment pane is displayed containing the Index drop-down list that contains IRCs defined in Rate Management including the seven indices to be used with the Adjustable Rate Mortgages(ARMs) meant for ADCo purpose, whose reference currency is always US Dollar. Select the required IRC.
5. Click Apply.